The IPCC (Intergovernmental Panel on Climate Change) Report has been able to go more unnoticed with the calamity caused by Russia invading Ukraine, and it shouldn’t. The IPCC defines the state of knowledge around the physics of climate, its impacts and how to adapt to them, and what to do to mitigate them. The diagnosis is not favourable, it is not enough that the growth of greenhouse gas (GHG) emissions was reduced by half in the past decade: it is necessary to achieve emissions reductions with more energy efficiency and, above all, with much more energy not fossil And the time window for reaching the Paris Agreement temperature target is closing fast, with this decade remaining at most.
Energy requires a decisive transition for the long life of the installations, preventing the new capital to exploit fossil fuels from hindering the expansion of renewables. Specifically: that the substitution in Europe of Russian natural gas for that of other producers does not stop the energy transition, more so given the exponential advances in photovoltaic and wind power generation capacity, or in electric mobility thanks to falling costs. However, more than 60% of the world’s electricity still comes from fossil fuels, and the current pace of renewables additions is not consistent with the net-zero goal by 2050. More is needed, including the development of carbon sequestration, more effective if done in geological and oceanic deposits than through vegetation and soil, more vulnerable.
How to achieve it? With ambitious policies. The IPCC recognizes the advances in carbon prices, which cover just over 20% of global emissions, although with low levels to be sufficiently effective. Prices, regulations and redistributive policies that mitigate regressive effects have to be implemented decisively, with a global scope and in the long term, as is the problem to be solved.
Given the huge investment needs, the alignment of financial flows is decisive, which the IPCC estimates are between three and six times less than what is necessary. In developing countries, more vulnerable and indebted, and where the costs and risks of financing, climatic or not, are also higher, aid will also be needed both for justice and efficiency. The boost to international climate financing will depend on reducing the risk premium with institutional strengthening and public-private collaboration schemes in risk sharing.
In short, the calamity should not stop the emergence of climate mitigation, with an ambitious approach and integrating different policies.
J. Julian Cuberofrom BBVA Research.
He knows in depth all the sides of the coin.
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